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BoE Cuts Rates Amidst Budget Uncertainty
The Bank of England cut interest rates, but concerns over the recent budget and global uncertainty, including Donald Trump's potential return, could hinder further cuts.
English
United Kingdom
PoliticsEconomyLabour MarketUkInflationInterest RatesGlobal Uncertainty
Bank Of EnglandMonetary Policy Committee (Mpc)ObrS&P Global
Andrew BaileyRachel ReevesDonald TrumpMel StrideLiz TrussTim Moore
- How did the markets react to the announcement?
- The pound strengthened after the announcement, reflecting market expectations of sustained inflation and interest rates, partly due to the impact of the recent budget.
- What was the Bank of England's decision regarding interest rates?
- The Bank of England cut interest rates from 5% to 4.75%, but the Chancellor's recent budget, increasing borrowing and taxes, might counteract this and keep borrowing costs higher.
- How is the recent budget expected to impact inflation and interest rates?
- The OBR predicts that the budget will add almost half a percentage point to price increases and keep interest rates and inflation elevated for longer, impacting the Bank's ability to swiftly decrease interest rates.
- What factors did Governor Bailey cite as influencing the Bank's decision?
- Governor Andrew Bailey acknowledged both global and domestic uncertainties influencing the decision, particularly highlighting the potential impact of Donald Trump's potential return to presidency and his proposed tariffs.
- What are the expectations for future inflation and interest rate movements?
- While the MPC expects inflation to fall to the 2% target, the recent budget and global uncertainties, including the possibility of a Trump-led trade war, could push it higher and slow the rate of interest reductions.